The Future of Government Systems

It’s a subscription model.

The pace of consumer expectation, market demand, and innovation is blistering. We are consuming technology, apps, and services as fast as they can be produced, and we use them for a micro-moment before we get bored with them and move to the next new offering. This is the new normal. The way citizens want, or really expect to interact with their government is driven by a culture where services and products are specifically tailored to them and their needs, right now.

So where did this sudden burst of speed and expectation come from?

Our relationship with technology and how we access it has been evolving rapidly in the 21st century economy. First it was Software-as-a-Service (SaaS), then came ‘The Cloud’, then it was Infrastructure-as-a-Service (IaaS), followed by the formalization of the Internet of Things (IoT). Now the natural sequence leads us to Systems-as-a-Service (SyaaS).

The approach of ‘owning’ every system or offering is not sustainable; today’s operating model is based on a subscription approach.

The approach of ‘owning’ every system or offering is unsustainable; today’s operating model is based on a subscription approach. The talent pool is shifting constantly, technology platforms are evolving constantly, and obsolescence for any given system averages 5 years or less. The outsourcing model is trying to keep up, but even that is starting to falter. The largest systems integration companies on the planet are completely rethinking their outsourcing offerings, because they can’t make money doing it anymore.

If you want to get funding from a venture capital (VC) firm today for a platform offering, it had better be a subscription based offering. VC’s don’t want to fund product development anymore; there’s no money in it, and it is too hard to compete against cloud. Companies are having to adjust strategy two to three times per year because any direction is good for only 4-6 months before the market shifts.

New products need to be conceived and go to market in 6 months, whereas 5 years ago, the timeframe was 18 months. The average life span of an S&P Index company is less than 15 years, whereas in 1997, it was 40 years.

The current outcome metrics for government and private sector systems initiatives has the same risk profile as a VC funded startup; that’s not low risk.

An outcome economy.

We work within and serve an outcome based economy that values buying a finished product instead of process, and subscription as opposed to ownership.

The challenge government faces is the same one that every Fortune 1,000 company faces: they can’t keep up with the pace of new demands. The volume and complexity of legislative changes, citizen expectation, technology changes, security breaches, and net impacts of initiatives on elected officials are massive.

We work within an economy that values buying a finished product instead of process.

Government system projects now cost billions, not hundreds of millions. There is only one shot to get them right, and there is no backing out of the rabbit hole anymore. Expectation is absolute, without regard for conditions or mitigating factors.

The future of government systems is a subscription model; government owns the rules and the policy, and buys an outcome, not a project. Companies with platforms and offerings show up with solutions that are already configured and ready to work. Vendors own the risk of technology selection, hosting, configuration, maintenance, and enhancements. Government pays a subscription fee when the system works, and not a dime until it does.

Time-to-market, by half.

Time-to-market needs to be half of what it is right now, and when the need shifts, the burden is on the supplier to make the changes under a continuous delivery model. When the offering doesn’t work any longer, government can move on to the next subscription provider that is delivering the value it needs. The pace of change is too fast, and to expect government to ‘own’ the process for keeping up is simply, well, unfair.

Government is being stretched thinner and thinner every year. This transition to a subscription model will be challenging for some, but it is already taking hold in places like California, Texas, and Florida.

In recent years, this type of transition was seen more in behaviors such as leasing office space rather than buying/building, privatizing the construction and maintenance of toll roads, and in the decommissioning of data centers to host everything in the cloud. Not only is this model viable, but it is currently being used every day in government.

The future of government systems is a subscription model. Pay only if it works, no more buying software or services, no more multi-year RFP processes, and no more managing development efforts.

If it works, government pays, and if it doesn’t, they don’t.

About the Author

Alex Castro is M Corp’s Chief Executive Officer, and one of its founders. Get more of his articles, or connect with him on LinkedIn.